Study Shows Retailers Use Marketplaces to Acquire New Customers

Retailers rank online marketplaces fifth for effectiveness among customer acquisition tools and allocate 16% of their digital marketing budgets to online marketplace initiatives and operations, according to a new Shop.org report conducted by Forrester Research and Bizrate Insights.

Results of "The State of Retailing Online 2015" were released on Tuesday. It included findings about how retailers use online marketplaces such as Amazon, eBay, and Rakuten:

As more companies look for ways to grow their ecommerce business and diversify their traffic drivers beyond search, retailers are also exploring online retail marketplaces - whereby a retailer sells goods via another retailer's site - to acquire new customers.

The study found that merchants surveyed rank online marketplaces in fifth place for effectiveness among customer acquisition tools, and 32 percent are spending more on this marketing tactic this year than last.

The study found that on average, retailers surveyed allocated their digital marketing budgets as follows:

Search engine marketing: 33%Search engine optimization: 16%Online marketplace initiatives and operations: 16%Email marketing: 14%Remarketing: 13%Social: 11%Affiliate: 11%

Paid search and email marketing remain among retailers' top effective customer acquisition channels. However, social media has moved up the ranks to become an important tool for engaging with and attracting new customers, according to the report.

Of the retailers surveyed, 25% cited Facebook as a top acquisition platform - and 58% are increasing their year-over-year spend on social media marketing, second only to the number of companies who are spending more on search engine marketing (63%).

When it comes to paid social media specifically, half of retailers surveyed said they are spending more this year than last year on paid Facebook options, such as promoted posts and paid ads.

YouTube came in second with 29% saying they will spend more on paid options for the video website, followed by Pinterest (27%), Twitter (22%), Instagram (20%) and Snapchat (6%).

In a chart titled, "Average Cost Per Order For Types Of Marketing Channels," the report shows that paid social media costs an average of $28, while online marketplaces cost an average of $14. Email marketing came in lowest with an average cost per order of $6.

With paid social costing the highest, the report found "Merchants consistently reported that social networks are able to drive traffic and awareness more than sales to their sites."

The annual State of Retailing Online Report surveyed 240 companies in May and June 2015. Industries surveyed included apparel, footwear, general merchandise, home furnishings, and personal care.

Source: Study Shows Retailers Use Marketplaces to Acquire New Customers